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Carbon Tax Debacles, Cautionary Tales

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Even though a carbon tax could offer more benefits than a carbon cap and trade system, taxes are just plain politically unpalatable. But that hasn’t stopped some leaders from trying — now there are two policy makers heading for political martyrdom via carbon taxation.

To the north, British Columbia Finance Minister Carole Taylor has unveiled North America’s first carbon tax of $10 per ton of greenhouse gas. Meanwhile, across the pond London Mayor Ken Livingstone has been taking a beating over his proposed “congestion charge” which would charge drivers of dirty cars £25 a day to drive in London.

There are fatal flaws in each of these proposals which could set a bad precedent for the cause of carbon taxation elsewhere in the world. The B.C. carbon tax, scheduled to go into effect in July, does not apply to the emissions from industrial farms, landfills and oil and gas producers which make up a third of the province’s emissions. Instead the tax will be applied to driving and heating costs.

And Livingstone’s congestion charge has already earned him a “judicial review process” leveled by Porsche claiming it is an “unjust 3000% congestion charge increase.”

With all the political momentum in the United States behind a carbon market, discussion of a carbon tax has been almost entirely bypassed. These local level carbon tax pitfalls are exactly the sort of piecemeal regulations that transnational corporations fear more than federal level regulation. In the United States the lack of discussion of a carbon tax, and industry’s staunch refusal to effectively regulate itself, have made a carbon market the de facto emissions solution.

A carbon tax has not gotten its due, and a recent report from the Congressional Budget Office says that a tax could offer five times the net benefits of an inflexible cap. The report does say the next best alternative is a cap-and-trade scheme with an emergency valve, the system we’re likely to see in the post-election years. But if not taxation, can’t we at least have some consideration?

6 Responses to “Carbon Tax Debacles, Cautionary Tales”

  1. Green energy is definitely the best solution in most cases. Technology like solar energy, wind power, fuel cells, zaps electric vehicles, EV hybrids, etc have come so far recently. Green energy even costs way less than oil and gas in many cases.

  2. Rory Gawler

    I agree that taxes are unpalatable.

    However, a carbon tax can shift the tax burden onto those who would otherwise destroy our civilization and away from those with a more pro-social stance.

    A Carbon tax doesn’t necessarily mean MORE overall taxes. It can very easily mean shifting taxes to those who deserve to pay more.